Cardano hodlers are disappointed, initial staking rewards only 4.6%

During the expected launch of the Shelley network at the end of this month, Cardano published details of the staking rewards.

The amount of staking rewards is determined by several factors. For example, the number of staking pools, the use of a given pool and the number of blocks produced. Currently, not all Cardano rewards attributes are definitively determined. However, based on initial IOHK estimates, users receive 4.6% per year.

Rewards from the test network (ITN) ranged between 6% – 8%, depending on the individual staking pools. Most ADA members expected rewards similar to those in the test network. For this reason, the reward report for ADA holders is shocking.

In response to a notification, one user wrote:

“Most people predicted 6-10% and even Charles said in one of his AMAs that it would be similar to ITN. I’m happy with 6%, but under 5 .. better to sell and buy real estate.”

Another pointed out that the number is imaginary; What’s more, 4.6% is still a better rate than any other bank currently offers.

Cardano Staking – Overview

Lars Brünjes, Director of Education at IOHK, provided an overview of the staking process in Cardano and a guide to the betting calculator.

“How are the rewards calculated? “It is decided on the basis of an epoch. For each epoch that lasts five days, the rewards are calculated on the participating “stakers” and are paid to all involved.” Each staking pool receives a reward determined by factors such as the number of ADA tokens in the pool. the pool’s operating costs on margin, block production performance, and the number of locked ADA tokens in the pool.

After deducting all costs, the remaining balance is distributed proportionally among all delegates in the pool.

Brünjes also talked about declining bonuses for large pools. This process reduces the payout of bonuses if the fund is too large. This is currently set at around 0.66%. If the fund controls more than 0.66% of the total volume of ADA pools, then the rewards paid to this fund are reduced.

The intention is to motivate participants to move funds to smaller pools, in the pursuit of better stakind rewards, which also supports greater decentralization of the network.

Brünjes mentioned that discussions with the community will take place only after the staking begins. In this way, can get feedback on changing system parameters.

How does Cardano compare to other staking protocols?

Although 4.6% is currently not definitive and is based on uncertain factors, it is still much lower than the yields of other staking protocols.

Matic Network currently pays 53%, based on 18% of locked Matics in the staking pool. This amount will decrease as more Matrix tokens are locked for staking. However, even if 100% of the circulation is locked, the Matic protocol pays 9.95%.

Tezos is much more comparable to Cardano, has a similar market capitalization and trading volume. The data show that Tezos currently pays a staking fee of 5.48%.

Although the Cardano community may be disappointed, the amount of staking rewards is not final.

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